Applicability of GST Audit
How is the audit defined in GST?
As per section 2(13) of CGST Act,2017
Audit as defined above mandates certain aspects like examination of records, returns, and other documents or furnished but there is no specific mention in the Act or the Rules about what should be the methodology of the audit or the manner of reporting. Only a format for reconciliation statement certificate in Form GSTR 9C is notified.
Applicability of GST Audit
⊗ As per section 35(5) of CGST Act, 2017 – every registered person whose turnover during a financial year exceeds the prescribed limit shall get his accounts audited by CA or a Cost accountant and shall submit
- A copy of the audited annual accounts
- Duly certified reconciliation statement u/s 44(2)
- Other documents as may be prescribed and required
⊗ As per section 44(2) of CGST Act, 2017 – every registered person who is required to get his accounts audited u/s 35(5), shall electronically furnish
- Annual return (GSTR 9)
- A copy of the audited annual accounts
- A reconciliation statement (GSTR 9C)
- reconciling the value of supplies declared in the return furnished for the financial year with the audited annual financial statement, and such other particulars as may be prescribed.
⊗ As per Rule 80(3) of the CGST Rules, 2017 – every registered person whose aggregate turnover during a financial year exceeds two crore rupees shall get his accounts audited as per section 35(5) and shall furnish electronically either directly through the common portal or through a Facilitation Centre notified by the Commissioner.
- A copy of the audited annual accounts
- A reconciliation statement (GSTR 9C) duly certified.
What is aggregate turnover under GST?
Aggregate turnover as defined in section 2(6) of CGST Act, 2017
In simple words, aggregate turnover means the total of Taxable Supplies(intrastate and interstate) add Exempt Supplies add Export Supplies add Branch Transfers less Taxes i.e. CGST, SGST, IGST, and cess
Note: Aggregate turnover does not include the turnover/ value of inward supplies on which tax is payable under the reverse charge mechanism.
Note: The term turnover is not defined under the GST Act.
What do you understand by a duly certified reconciliation statement?
When a Chartered Accountant or a Cost Accountant reconciles the values declared in the GST return furnished for the financial year with the audited annual accounts and prepares a report/statement in prescribed form GSTR 9C of reconciliation giving reasons for the same is called a duly certified reconciliation statement.
Contents of GSTR 9C
Overview of GST Audit
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GST AUDIT |
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| Form GSTR 9C | GST Reconciliation Statement & Certification |
| Reconciliation of what? | Reconciliation of details reported in
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| If differences are found during reconciliation |
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| Who needs to get GST Audit done? | GST Audit will be applicable to those registered persons whose aggregate annual turnover exceeds Rs 5 crores in that financial year. |
| Who can do this? | Chartered Accountant or Cost Accountant |
| How to file? | File electronically on GST portal using DSC or EVC. |
| Supporting documents while filing GSTR 9C |
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| Due Date | 31st December of the year subsequent to the relevant Financial Year |
| Penalty for non-compliance with the audit requirement | No specific penalty has been prescribed.
General penalty u/s 125 up to Rs. 25,000/- will be levied. A general penalty is imposed for contravention of any provisions or any rules of GST for which no specific penalty is separately provided. |
Can additional taxes be paid with GSTR 9 or GSTR 9C?
No, payment of additional taxes or interest is not admissible while filing GSTR 9 or GSTR 9C. If while reconciling or filing an annual return, declaration of the difference in turnover/taxes/ITC would simply be construed as providing information to the proper officer about the same. An additional payment of taxes in such cases can be done by filing FORM GST DRC-03 (for payment of tax and interest thereon). The proper officer will issue an acknowledgment in FORM GST DRC–04 for acceptance of payment made by the said person.
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